FFS is dead in the water.
Premier League lands £3bn TV rights bonanza from Sky and BT
New entrant BT to launch sports channel, as mier League hails 71% income boost from live TV rights auction
Manchester City finishing top of the league made for an exciting climax that helped fuel bidding war.
The Guardian, Wed 13 Jun 2012 19.30 BST
The landscape of British broadcasting has shifted dramatically after BT bought a large slice of televised football rights, boosting the Premier League's next TV deal to a record £3bn over three years, a 71% increase.
This equates to at least £14m more per year for each football club, with the bottom team in the league from 2013-14 onwards likely to receive more than the £60.6m Manchester City earned this year for ending the season as champions. Each individual televised match will now cost the broadcasters £6.6m, up from £4.7m under the previous deal.
BSkyB, which has built its business over 20 years on the back of live top flight football, retained most of the rights, securing 116 matches per season from 2013-14 in exchange for £2.3bn over three years.
But BT sprung a huge surprise by winning the rights to 38 games, including almost half the "first pick" games on offer, in exchange for £738m over three years. Richard Scudamore, Premier League chief executive, said BT's securing 18 of the 38 coveted "first pick" matches would be a "game changer". "[BT chief executive] Ian Livingstone and his colleagues have hugely ambitious plans. They have not invested in all this fibre [optic cable] for nothing, they want to establish a direct relationship with consumers," he said.
BT – the latest challenger to Sky after Setanta and ESPN – is expected to launch a new sports channel, available on a variety of platforms. But BT will use the rights to push its high speed broadband service. Its matches will be shown at Saturday lunchtime and on midweek evenings.
Against a grim economic backdrop elsewhere, Scudamore admitted he was "surprised" by the huge hike in income, which he said would allow clubs to continue to compete with their European rivals.
The huge increase in income is good news for club owners, players, their agents and luxury car dealerships and, on the evidence of previous deals, is likely to lead to another sharp rise in transfer fees. But despite the unprecedented riches that have flowed into the coffers of top flight clubs during the Premier League era, clubs made losses of £361m last year despite record income of £2.3bn.
Scudamore pleaded with clubs not to simply use the new deal to rack up losses and fuel wage inflation. While he said he wanted clubs to still invest in the best talent, he also made a plea to invest in infrastructure and youth development.
"We are entering a new era with financial fair play [the new Europe-wide regulations of club spending], I'm hoping it will get invested in things other than playing talent. It should also be able to achieve sustainability," he said.
The effect on fans is more uncertain. BT and Sky may have to charge more to cover their huge investment. When asked whether clubs would use the windfall to subsidise ticket prices, Scudamore would say only that it "gives them more choices".
Tony Ball, the former BSkyB chief executive who helped fuel the company's growth in the mid-1990s, is a non-executive director on the BT board and is likely to have advised it on its bidding strategy. ESPN, the US giant that entered the market when Setanta went bust trying to compete with Sky, has now been frozen out.
Scudamore said the deal would give more certainty to his member clubs. "It allows people to plan and gives us a degree of financial security. I don't underestimate that. The idea you can plan with some certainty your revenues for next four years is a big thing."
He said that he hoped that clubs would use the windfall to plan prudently for the future and reduce their losses, reducing their reliance on benefactors. But history would suggest the majority will flow directly into the pockets of players.
"Priority number one is retain and attract top talent but there ought to be a way of doing that while achieving sustainability. Some of it ought to be used to reduce losses."
He added that the windfall would help clubs comply with new European regulations forcing them to break even.
The first TV deal of the Premier League era was worth £304m over five years. Under the new deal, clubs will be guaranteed £3bn from live rights, plus £180m from the BBC for Match of the Day.
Once internet rights and overseas sales, which brought in £1.4bn under the current deals, are taken into account, the total is likely to easily top £5bn over three years.
Scudamore refused to elaborate on other bidders but ESPN, the US sports giant that entered the market when Setanta went bust, and al-Jazeera are among those believed to have ratcheted up the price for Sky and BT.
Scudamore said the breakneck climax to the season, with the league title and relegation issues going to the wire, had helped fuel the appetite for the Premier League "product".
"I've been five times round this block and each time people say the bubble has burst. As long as we invest in the top talent, as long as we invest in compelling competitive football, as long as we have teams in the bottom three beating teams in the top three, we have a compellingly competitive competition."